Credit card market failures

There's an interesting market failure at work in the micropayment credit card situation, as described in Big Bucks in Micropayment. The problem is that the incentive to minimize the number of credit card transactions (transaction fees) is not paid by the person deciding how many transactions to make (the customer). I go to Starbucks every day at spend $1.87 on a cup of coffee, and pay with my debit card. How much money does Starbucks actually make off of that? Not much--but what incentive do I have to remember to re-fill my Starbucks card on a regular basis, minimizing the number of credit company transactions? Not a lot.

The rise of micropayment-focused companies fixes this failure of the market, because they act on the merchant side. The customer rarely sees the micropayment company (except for PayPal). When I buy a song off iTunes, I use an iTunes interface to do it. The customer doesn't have to do anything differently, while the merchant saves a little money. The free market does work eventually, even if it's sometimes a little slow.